Research On The Impact Of Environmental Regulation On Corporate Innovation Under The Mediation Effect Of Financing Constraints

Since 1978,the extensive economic growth mode in China has made environmental problems increasingly prominent.In recent years,the government's environmental regulation has gradually strengthened.However,there are two opposite manifestations when corporates deal with environmental regulation.Some of them respond negatively,while others actively adopt technological innovation to establish competitive advantages.The impact of environmental regulation on technological innovation has always been a hot topic for scholars at home and abroad.The “Restriction Hypothesis” holds that environmental regulation squeezes R&D investment and restrains corporate innovation,while the “Porter Hypothesis” holds that the strengthening of environmental regulation can stimulate corporates to increase innovation activities.Some scholars have found that the relationship between the two is uncertain.However,due to the differences in empirical methods,research samples,and proxy variables,these studies lead to inconsistent research conclusions.So,can environmental regulation promote the innovation activities of corporates? This is the first key issue in this paper.In addition,a large number of studies have proved that R&D activities of corporates can not be separated from the support of external funds,and the existence of external financing constraints inhibits the R&D innovation activities of corporates.In the existing literature,the analysis of the conduction path of environmental regulation to corporate innovation is worthy of supplementing and expanding,and there is no research on the integration of environmental regulation,financing constraints and corporate innovation into a unified framework.So,can the strengthening of environmental regulation promote corporate innovation by alleviating the financing constraints of corporates? This is the second key issue of this paper.Based on literature review and theoretical analysis,this paper proposes two research hypotheses.Using the annual observation data of 8999 companies in 1539 A-share manufacturing listed companies in China from 2007 to 2017,the principal component analysis method was introduced to construct a comprehensive index of environmental regulation in 31 provincial-level regions,and the test model of mediation effect of “environmental regulationfinancing constraints-corporate innovation” is constructed.The mixed OLS regression method is used to empirically analyze the relationship between environmental regulation,financing constraints and corporate innovation.The results show that: firstly,environmental regulation has a significant positive impact on R&D investment of corporates.Secondly,financing constraints play a significant part of the mediating role in the positive impact of environmental regulation on corporate innovation.Thirdly,the transmission path of “environmental regulation-financing constraints-corporate innovation” is not only established in the short term,but also in the medium and long term.Fourthly,environmental regulation has a significant positive impact on innovation activities of state-owned corporates and non-state-owned corporates,and the mediating role of financing constraints is established in both sub-samples,but greater in state-owned corporates.In addition,whether it is corporates in the eastern region or corporates in the central and western regions,the strengthening of environmental regulations can significantly promote their innovation investment,but the mediating role of financing constraints is only significant in corporates in the eastern region.This study not only provides empirical evidence from the micro level for the “Porter Hypothesis”,but also further explores the mechanism of environmental regulation affecting technological innovation.